Whatever your political views were during the referendum, there’s a fair chance that you will have seen arguments relating to European holiday costs post the Brexit vote (the final result). This has also been linked to discussions about European travel insurance. |
Here’s a quick, professional and hopefully objective summary.
European Holiday Costs Post Brexit
The first thing to bear in mind is that the world didn’t end the moment the vote was announced. The holiday and travel companies are still here and they’re VERY keen to get you to part with your cash.
Nothing short of a global catastrophe is going to change that – so deals will still be out there to be had.
However, it’s probably fair to say that most experts predict that European holiday costs are likely to go up as a result. Nobody can be sure when, but it might be sooner than we think and perhaps continue over 1-3 years.
In the short term:
• Currency fluctuation with Sterling against the US Dollar. A lot of the cost of your holiday (e.g. aviation fuel) is calculated based upon holiday companies paying for things in US Dollars. The currency markets are worried and they’ve pushed the value of Sterling way down against the USD. That means higher prices.
• A weaker Pound against the Euro. The effects here may be less significant, as the Euro is seen by the markets as a weaker currency. Even so, modest declines in Sterling’s value against the Euro will push up your holiday costs and reduce the spending power in your pocket once abroad.
• Opportunism. Yes, it’s not unknown for holiday companies to try and justify cost increases during times of political change (the Trojan Horse Syndrome), though the commercial competitive pressures of the market should keep control of this.
• Company valuations. A slightly trickier one, but it relates to the valuations of companies declining as the share markets have retreated due to nerves over the vote. Holiday companies and all related industries will be keen to try and offset that by producing some investor confidence-building results and price increases seem an attractive way of doing so.
The Medium to Longer Term:
• It seems far from clear what will happen to the EHIC reciprocal health cover agreements. If the system winds down, then families will need to look for comprehensive European travel insurance which includes health-cover.
• If the markets’ nerves with Sterling start to move investors away from the pound and into the Euro as well as the US Dollar, then prices will inevitably rise.
• A BIG factor in the NO vote was a promise to radically reduce immigration. If that promise is honoured, the EU is likely to respond and that will re-introduce entry controls in EU destination countries. That will cause not only delays but also more work for the immigration and border control authorities, which will generate costs – which will be passed onto the holiday companies.
It’s not necessarily inevitable that prices will rise substantially or quickly – but it does seem to be a very real possibility.
For the cost-conscious family traveller, shopping around is going to become ever-more important, including for that more comprehensive European travel insurance should the EHIC system be wound down.
Patrick Chong is the Managing Director of InsureMore, an award-winning team of specialists in worldwide and European travel insurance policies. Besides offering great deals on travel insurance, Patrick also collects and shares the best free travel competitions to help his clients get the most out of their holidays.
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